CCEA okays new urea policy to boost domestic manufacturing, cut imports

The CCEA has approved the National Investment Policy for Urea-2026 (NIPU-2026) to encourage domestic manufacturing and reduce imports. The policy aims to set up 8-9 new gas-based urea plants to make India self-sufficient in urea production.

The Cabinet Committee on Economic Affairs (CCEA) on Tuesday approved the National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026) to encourage fresh investments in domestic urea manufacturing, to increase indigenous production and reduce the country's dependence on imports.

Towards Self-Sufficiency in Urea

The new policy, approved by the Cabinet, will support the setting up of new gas-based urea manufacturing units across the country as India moves towards self-sufficiency in urea production.

Briefing the media after the Cabinet meeting, Union Minister Ashwini Vaishnaw said, "About 8-9 new urea manufacturing plants will be established, where each of them will produce about 12.7 lakh metric tonnes. From these plants, about 1 crore metric tonnes of urea will be produced." He added, "Our import dependence has reduced up until now and with these new plants, the complete urea requirement will be manufactured in India and will move us toward Atmanirbhar Bharat."

Key Features of NIPU-2026

According to the Cabinet, the policy introduces several changes compared with the earlier New Investment Policy (NIP)-2012, including the separation of fixed and variable costs for greater transparency, the introduction of a return on equity (RoE) band with a floor of 12 per cent and a ceiling of 16 per cent, and measures to mitigate foreign exchange risk by converting fixed costs into Indian rupees after four years based on prevailing exchange rates.

The Cabinet said these changes are expected to result in savings of more than Rs 250 crore for every plant established under NIPU-2026 compared with projects set up under the previous policy. The new policy will apply to all future gas-based urea manufacturing units established under NIPU-2026.

Background and Need for New Policy

According to the Department of Fertilizers, the earlier NIP-2012 helped establish six new urea manufacturing units, including four through joint venture companies of nominated public sector undertakings and two by private companies. The policy period expired in October 2019.

India currently has 33 operational urea manufacturing units with a total reassessed installed capacity of 269.42 lakh metric tonnes (LMT). However, a gap remains between domestic production and demand, requiring imports to meet the country's urea requirement. The Cabinet said the Department of Fertilizers has received multiple proposals for new urea plants, making a fresh investment policy necessary to encourage additional capacity and strengthen India's long-term fertiliser security. (ANI)

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